Start Up No.1210: the decade’s puzzled economists, Foxconn wriggles in Wisconsin, Samsung’s smaller fold, and more

Biopharma companies aren’t working on new antibiotics – because of a quirk of the US health care system. CC-licensed photo by NIAID on Flickr.

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A selection of 10 links for you. Use them wisely. I’m @charlesarthur on Twitter. Observations and links welcome.

Biopharma has abandoned antibiotic development. Here’s why we did, too • Endpoints News

Isaac Stoner is president and COO of Octagon Therapeutics:


Patients who contract, or succumb to, a resistant infection are severely undercounted. Under the Affordable Care Act, hospitals must pay a penalty for each hospital-acquired-infection (HAI) occurring with in their in-patient population. As a result, if a patient dies from a superbug contracted during a procedure such as surgery, the official cause of death may be instead listed as “Complications from Surgery.” Consistent and systemic undercounting of illnesses and deaths from resistant infections further discourages the development of new antibiotics as the number of patients who need these medicines may appear to be very small.

The failure of the market for new antibiotics has al so been caused by several economic and commercial factors. Approval incentives were not the only policy included in the GAIN Act. There were also measures designed to promote stewardship, or appropriate use, of new antibiotics. In short, when a new antibiotic be comes available, it should only be used as a last resort to prevent new resistance from arising. This kind of responsible use is a good thing! But stewardship severely limits the number of patients who will receive a new antibiotic and, correspondingly, the potential sales volume.

Insurers pay for in-patient antibiotics as part of a lump sum to hospitals known as a Diagnosis Related Group (DRG). Using a cheap antibiotic increases hospital profit margins, while using an expensive new drug could mean that a hospital might lose money by treating a given patient. As a result, hospitals are incentivized to use cheaper antibiotics when ever possible.


So in short we’re at risk of antibiotic collapse because of perverse incentives in the utterly broken American healthcare system. So much for which America is to blame.
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Economists got the decade all wrong. They’re trying to figure out why • WSJ

Greg Ip, on how economists’ forecasts for interest rates and inflation and GDP kept being wrong:


in 2013 Larry Summers, a former top adviser to Presidents Bill Clinton and Barack Obama and now an economist at Harvard University, advanced an alternative explanation: “secular stagnation.” He borrowed the phrase from an earlier Harvard economist, Alvin Hansen who used it in 1938 to describe the Great Depression’s persistently weak growth and high unemployment. Mr. Hansen tied it to weak investment due to slow population growth: Businesses had less need to invest when there were fewer new workers and customers and when aging households bought fewer big-ticket products like houses.

Slow population growth is once again weighing on growth and interest rates, Mr. Summers noted, and he added several other factors: the fastest-growing businesses, such as social-media platforms, invest little of their rich profits. Higher inequality meant more income flows to the high-saving, low-spending rich.

Though initially skeptical of Mr. Summers’s thesis, many economists have since warmed to it, at least for other parts of the world, if not the U.S. In some countries like Germany a persistent excess of savings manifests itself as a trade surplus which flows into other countries’ bonds, holding down interest rates around the world.

Secular stagnation has several profound implications. First, with interest rates closer to zero, central banks are less able to combat future recessions. Second, a structural shortage of private borrowing means governments can run big deficits without pushing up interest rates.


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Samsung denies selling 1 mln Galaxy Fold smartphones • Yonhap News Agency



Samsung Electronics on Friday denied media reports that the company has sold one million Galaxy Fold smartphones globally since the device’s launch in September.

Samsung Electronics President Sohn Young-kwon said at a conference organized by US tech media TechCrunch that the South Korean tech giant has sold 1 million Galaxy Folds so far, double the industry’s earlier estimate.

But a Samsung spokesman said Sohn may have confused the figure with the company’s initial sales target for the year, emphasizing that sales of the tech firm’s first foldable handset have not reached 1 million units.

Earlier, Samsung said it expected to sell 500,000 Galaxy Fold globally this year.

Many analysts previously expected that Samsung would sell about 400,000 to 500,000 units of the foldable phone this year.


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100 best memes of the decade • Buzzfeed News

Katie Notopoulos, Julia Reinstein and Ryan Broderick:


This decade, memes became something not just for a handful of internet nerds who lurked on message boards; memes are now for everyone. The online culture of this decade hasn’t just changed the words we use, it’s changed how we express ourselves. Huge technological shifts of the 2010s led to this: widespread smartphone adoption and the rise of newfangled social media platforms like Vine. Memes also became a business — brands used meme-speak and accounts like @fuckjerry made big bucks by reposting memes.


I learnt “deep fried” from this. Side note: how classic that Buzzfeed News’s roundup of the decade should be memes.
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Exclusive: documents show Foxconn refuses to renegotiate Wisconsin deal • The Verge

Josh Dzieza:


given that Foxconn is building something completely different than that Gen 10.5 LCD facility specified in its original contract with Wisconsin, is it still going to get the record-breaking $4.5bn in taxpayer subsidies?

Documents obtained by The Verge show that Wisconsin officials have repeatedly — and with growing urgency — warned Foxconn that its current project has veered far from what was described in the original deal and that the contract must be amended if the company is to receive subsidies. Foxconn, however, has declined to amend the contract, and it indicated that it nevertheless intends to apply for tax credits.

Foxconn has “refused by inaction” to amend the deal, says Wisconsin Department of Administration Secretary Joel Brennan. “They were continuously encouraged. It’s a relatively recent development, where they have said, ‘No, we don’t want to do anything with the contract.’ Our expectation has been, and continues to be, that they should want to come back and have discussions about this.”

The documents show it was Foxconn that first proposed amending the contract in a meeting on March 11th, 2019. Over the following months, various officials from the Wisconsin Economic Development Corporation (WEDC) and Gov. Tony Evers’ administration urged Foxconn to formally apply to revise its contract to reflect whatever it is actually building, a process that would involve describing Foxconn’s current plans, its expected costs, employment, and other basic details.

Foxconn never did.


The Verge has done great work exposing this gigantic screwup. Since July 2017, when it was first boosted by Trump and (now-defeated) Wisconsin governor Scott Walker, the ambition of this scheme has gone down and down, but its demand for subsidies – which in its original form wouldn’t have paid off until 2042; going to be much smaller now – hasn’t wavered.
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Google’s shopping comparison draws US Justice Department scrutiny • Bloomberg

Ben Brody and Naomi Nix:


US antitrust enforcers are examining Google’s conduct in the online shopping comparison market as they continue their probe of the search giant.

Richard Stables, chief executive officer of the shopping comparison site Kelkoo Group, said he spent more than an hour with Justice Department officials on Thursday to discuss how Alphabet allegedly hurt his European-based business.

The meetings show that the Justice Department, which opened its investigation of Google with a document seeking a wide swath of information on the company, has an interest in at least one of three landmark European antitrust cases.

A Justice Department spokesman said the department has had numerous productive meetings with third parties, but declined to comment on specific discussions.

Stables said he also met with congressional staff members for lawmakers on antitrust committees in the House and Senate earlier this week.

In 2017, the European Union fined Google €2.4bn ($2.8bn) and ordered the company to stop promoting its own shopping search results over those of competitors. Stables, who has been trying to convince the EU to toughen its remedy, outlined to the US antitrust enforcers what he said was harm to consumers stemming from Google’s practices.


The US Congress had a series of hearings about Google Shopping back in 2011. Eric Schmidt defended it. Is eight years too long a timeframe for anyone to remember this sort of stuff?
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Dominic Cummings thinks Brexit can end British nativism • Foreign Policy

Sahil Handa:


In laying out his own vision for a post-Brexit Britain, [senior government adviser Dominic] Cummings barely mentions national identity. His concerns are structural, not cultural—he is preoccupied with free trade, not ethnic replacement.

In laying out his own vision for a post-Brexit Britain, Cummings barely mentions national identity. His concerns are structural, not cultural—he is preoccupied with free trade, not ethnic replacement. He wants to increase skilled immigration and turn the UK into a magnet for young scientists from across the world, using the comparative advantages of the country’s National Health Service to take a lead in the controversial field of genomic medicine (the technology that allows doctors to detect disease risk and cognitive problems in embryos). He even proposes providing open borders to math and computer science PhD.s — not out of generosity, but out of an absolutist belief in scientific talent—an idea that Johnson has already taken up. Indeed, Cummings uses the word “talent” repeatedly in his writings. The Chinese Communist Party attracts talent, he contends; the EU and UK do not.

If liberal democratic values are to survive, the institutions that defend them require an overhaul. They must be streamlined, democratized, and updated at the same rate as the technology sector. Otherwise, the decisive policymaking of China’s authoritarian model—better suited to tackling climate change and other long-term challenges—could make it a serious rival to the West’s staid, stagnant bureaucracies.


Given that the Tories and Cummings are now firmly ensconced, it helps to know what they’re thinking. Cummings has quite an odd worldview, in my opinion, but that’s something we’re going to have to deal with.
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Chinese netizens slam Huawei’s legal bullying of former employee with a series of codes • Global Voices

Oiwan Lam:


Li Hongyuan, a former Huawei employee, was arrested by Shenzhen police on 16 December 2018 after Huawei accused him of extortion. He was detained for 251 days.

The court dismissed the charges due to “unclear criminal facts and insufficient evidence”. Li had negotiated with the company secretary for an employment termination compensation of about 300,000 yuan (US$42,430 dollars) and he had recorded his negotiation with the company secretary on tape. As the charge was acquitted Li received 100,000 yuan (US$14,100 dollars) compensation for his illegitimate detention.

Li later revealed to local media outlets that he had met a number of former Huawei employees in the Shenzhen detention center facing similar charges. One widely reported case was Zheng Meng. Zheng was arrested by Shenzhen police during his touristic visit in Thailand on 30 December 2018 and detained in Shenzhen for 90 days on extortion. He was in the process of negotiating with the corporation over his unpaid leave compensation.

Apart from employees, a number of netizens who criticized Huawei’s products were arrested for spreading rumors by Shenzhen police. For example, Wang Hao, who worked for a tech media outlet, was arrested in early November 2018 and detained for 252 days for criticizing Huawei mobile phone Mate 20. His charge was acquitted eventually but he had not received any compensation for his illegitimate detention.

As netizen uproar continued, the web censor stepped in to block the discussion on Chinese social media platforms. Prominent tech blogger William Long’s post on Weibo was blocked on 30 November and the blogger expressed his frustration on Twitter


There’s a lot in the story; Huawei getting dinged up and down social media. Though of course it’s difficult to know whether that has any broader relevance. (Thanks Nic for the pointer.)
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Twenty tech trends for 2020 • The Guardian

Alex Hern:


From new gaming consoles to activism at Apple, we predict the things you will – or won’t – see in tech in 2020


Pretty hard to argue with any of these: no Google Duplex in Europe (GDPR), more ads on smart speakers (has happened already), Facebook to kill Portal, and plenty more. Reliable.

From having done this game in the past, the difficulty in compiling them is always whether you go for the obvious back-of-the-net ones, or the out-there ones which, if they come off, will make you look like a fabulous guru. This is a good mixture.
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Look how easy it is to fool facial recognition—even at the airport • Fortune

Jeff John Roberts:


Masks and simple photographs are enough to fool some facial recognition technology, highlighting a major shortcoming in what is billed as a more effective security tool.

The test, by artificial intelligence company Kneron, involved visiting public locations and tricking facial recognition terminals into allowing payment or access. For example, in stores in Asia—where facial recognition technology is deployed widely—the Kneron team used high quality 3-D masks to deceive AliPay and WeChat payment systems in order to make purchases.

Those systems, which resemble the ones seen in airports, use a person’s face rather than a PIN or a fingerprint to validate user’s identity. Such masks, in theory, could allow fraudsters to use another person’s face—and bank account—to go shopping.

More alarming were the tests deployed at transportation hubs. At the self-boarding terminal in Schiphol Airport, the Netherlands’ largest airport, the Kneron team tricked the sensor with just a photo on a phone screen. The team also says it was able to gain access in this way to rail stations in China where commuters use facial recognition to pay their fare and board trains.

The transportation experiments raise concerns about terrorism at a time when security agencies are exploring facial recognition as a means of saving money and improving efficiency. In the case of the payment tablets, the ability to fool WeChat and AliPay with masks raises the spectre of fraud and identity theft.


Couldn’t beat the iPhone’s face recognition, but that’s hardly widely deployed. Quick-and-dirty facial recognition systems are going to have wide-and-dire flaws, one suspects.
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Errata, corrigenda and ai no corrida: none notified

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